These words are taken from a recent OECD trade policy paper that sheds new light on the impact of export restrictions on raw materials – critical for green technologies. In other words, Net Zero. “The research so far suggests that export restrictions may be playing a non-trivial role in international markets for critical raw materials, affecting availability and prices of these materials,” according to the report.

The OECD also says a tenth of the global value of exports of raw materials – like lithium and cobalt – needed for electric vehicles and renewable energy have faced at least one export restriction.

Supply dominance

It points to six countries – China, India, Argentina, Russia, Vietnam and Kazakhstan – as taking measures like export taxes, that are not prohibited by the World Trade Organization, with Beijing at the forefront.

Demand outstripping supply is another grave conundrum for countries on the receiving end. Titanium – along with rare earth elements and certain other materials – had the largest production volume expansion in the last decade. But, according to the OECD, this pales in comparison to the projected increase in demand for the green transition.

The cost of going green

As the Financial Times points out:
“The findings underline that fragmentation in the global economy threatens to drive up the cost of the clean-energy transition and indicates the potential shift in power away from the industrialised west towards mineral-rich nations.”

Therefore, import-dependant western nations are understandably eager to secure the supplies to create clean tech, such as EV batteries and wind turbines. But are those supplies both available and sustainable?

Short, domestic value chains

Another interesting angle from our point of view, that’s less explored, is that new European battery production plants are popping up amid the green transition frenzy, without huge forethought as to where the Critical Raw Materials are coming from to make the batteries in the first place. Huge rewards can be reaped from shorter, domestic value chains, with mining sites and production factories standing side by side; Henry Ford’s ‘all under one roof’ strategy. But, these chains take time to plan strategically, so they can be the most effective. Time we don’t have much of, with 2050 on the horizon.

These short value chains would be most useful for materials like lithium and cobalt (that we’ve already mentioned) – and phosphate, too, as interest in lithium-iron-phosphate batteries (LFP) soars. You can read more here from Norge Mining’s Founder, Michael Wurmser, about how verticalization should be the new globalisation.

CRM shortages

Many countries are reliant on phosphorus imports (from phosphate rock, mostly from Morocco) to meet their food demands – as its use has mostly been in fertilisers, to date. But with Ford, Tesla, Hyundai, and other car brands all incorporating LFP batteries into their models – thanks to lower costs, efficient charging, and greater safety – the world’s thirst for phosphate grows more insatiable by the day. Some scientists are even warning of a ‘phosphogeddon’ as shortages loom; we are going to reach peak phosphorus, allegedly, in just a few years. The phosphate deposits that lie beneath Norway’s surface, it seems, can’t come soon enough.

From critical to strategic

Against this bubbling backdrop, the European Union has updates its Critical Raw Materials (CRMs) list. It’s also going to be identifying a subgroup of so-called Strategic Raw Materials (SRMs) – CRMs that are strategically important for green, digital, space and defence applications and are subject to future supply risks. We will watch on with great interest to see if phosphorus – already a CRM – will be elevated to SRM status, given its extraordinary value in global food production and now EV batteries. According to the Review of Economic Policy: ‘These recent developments in EU policy action suggest that upscaling mining and recycling capacity have been identified as primary avenues for boosting EU strategic autonomy in the raw materials sphere.’

A clear picture is being painted: with warnings of the impact of increasing export restrictions on CRMs, increasing demand for green/ clean materials and supply vulnerabilities, an urgent shift is needed within Europe, to guarantee the green transition can be fuelled adequately – and succeed.